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A Study on Customer Satisfaction of Life Insurance Policies with Special Reference to LIC, Nandyal Town

M.T. Jalandhara Reddy1& Dr. B.C. Lakshmanna2

1Research Scholar, Dept. of Management, Regd. No. PP MAN 0446, Rayalaseema University, Kurnool, A.P., India
2Professor & Research Supervisor, Crescent Institute of Management, Anantapur, India
E-Mail: jala.tulasi@gmail.com



ABSTRACT

This study focus on the customer expectation and satisfaction level of life insurance policyholders, towards product, price and other services offered by LIC life insurance  company in India. Information is collected through questionnaire from 210 respondents from  Demographic data was also collected from these policyholders. Data was  analyzed to find out the customer satisfaction in terms of services offered by LIC. As per the analysis, majority of the policy holders satisfied with the services offered by LIC. It has been recommended that life insurance awareness should be spread and misperception towards life insurance should be cleared with the help of counseling and agent.Life insurance cannot

be compared with any other form of investment as life insurance gives you a life long benefit and returns on your money when it is most required. Insurance premiums are linked to age of the life insured and the earlier you buy, the lower are the premium requirements. Besides, the money stays invested for a longer time and thereby maximizing your returns through the power of rupee compounding. This study mainly deals with customer satisfaction of life insurance policies with special reference to LIC life insurance, chennai.
Keywords: customer satisfaction, LIC, Insurance, Agents, Information source.








ABOUT LIFE INSURANCE

Insurance is the study of risk financing through risk pooling. In a dynamic economy like the one we have in Hong Kong, a myriad of things can go wrong everyday with our life, our health, our home, our car, and our business. The use of insurance to reduce the adverse financial impact in case of a loss has become an important element of financial planning in our society.
Risk management, as a building block of financial planning, seeks to identify the risks a person or a business faces and evaluating their financial impacts in case of occurrence. Once the relevant risks have been identified, the risk manager must determine the need for insurance based on his financial goal and assess the various risk handling tools available to him in order to select the one that can best serve his financial goal. In order to make a sound risk management decision, the risk manager must have a thorough understanding of the designs and functions of various insurance products available for loss reduction and the new products and future trends of development in insurance.
Life insurance is unique among financial instruments. It is one of, if not the only financial instrument that is based on caring and love. Even though there can be personal advantages to having life insurance, the real impetus is love for those one cares most about – to make sure they are taken care of. So, applaud yourself for taking the time to learn about this subject (and please follow up with action whether through us or the organization of your choice.)
Interestingly, while one is taking care of the financial needs and wants of a spouse or the next generations, life insurance can also develop and build one’s personal financial goals while living. For example, because you have sufficient life insurance, you might be able to use more of your assets to enjoy life in retirement. Why is that? Because if you know you have sufficient life insurance you won’t feel that you are lowering the inheritance by spending some of your principal. You may actually “pay down principal” to some degree to yourself, especially if you have lifetime permanent life insurance as a backup.
There are various types of life insurance but they all have some common attributes. You pay an insurance company what are called premiums. At your death, the life insurance company pays an amount to the people you named in your policy, called beneficiaries. Also it’s interesting that if you named a beneficiary (ies) they’d receive the insurance amount free of income tax. Some types of life insurance have cash benefits available while you’re living. In these types, a portion of your premium goes into a cash reserve and builds on a tax deferred basis. You can access this money, called cash value. Some people use it to help education costs, enhance retirement cash flow or for any reason. Two of the most common types of “permanent life insurance” are called whole life insurance and universal life insurance.

OBJECTIVES OF THE STUDY

1.      To know the awareness level of among the customers about LIC
2.      To study the demographical factors in relation to life insurance
3.      To study the impact of income on satisfaction level of policy holder.
4.      To find the overall customer satisfaction towards LIC.

SCOPE OF THE STUDY

This project is undertaken with the purpose to take a survey in the market, various insurance policy holder with the special reference to LIC Life Insurance with an aim to analysis what the customer has in mind for taking a particular insurance policy for a reason from a particular company, influencing factors to take insurance policies, awareness of various promotional packages, policies offered by the insurance companies, evaluation of various services of offered by the company as well as the agent.

LIMITATIONS OF THE STUDY

There are certain limitations, which are common to all research studies in social sciences. The limitations of this study are given below.

·         The respondents of the study have been selected only from the Nandyal due to time and cost considerations.
·         The study has been undertaken at a particular point of time when the respondents had a set of beliefs, preference and attitudes, which are not static variables.
·            The numbers of respondents were restricted to 210 due to time factor.

BRIEF HISTORY OF INSURANCE

The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years.
Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Co-operative Assurance at Lahore were established in 1906. In 1907, Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912 India had no legislation to regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage.
Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the corporate office. LIC’s Wide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. LIC’s ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future.
LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued over one crore policies during the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year. From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC to take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.

Review of Literature
J.D. Power in their article titled, “Policyholders Satisfaction with the Agency-Based Sales Surpasses Satisfaction with Direct Sales in Japan”, reveals that policyholders are more satisfied with timely services, procedure and documentation followed, low premium and innovative products offered by the Prudential Life Insurance Company.
Ravipa Larpsiri and Mark Speece  carried out a study on “Determinants of customer Satisfaction: A Model of Technology Integration in Thailand’s Insurance Industry” depicts that magnitude of technology integration directly influences customer satisfaction whereas technology readiness of salespeople and customer indirectly influences the customer satisfaction towards insurance provider.
Song Hongmei in his survey entitled, “Insurers Score Low in Client Satisfaction”, observes that the policyholders are dissatisfied with the insurer’s services with regard to customer complaint lodged and claim settlement.
Ashley et al. in their article entitled, “The Focus of Business is Customer satisfaction”, reveal that agents thorough knowledge of the product, capability to understand the customer needs and recommend suitable policy to the customer, prompt delivery of product and responsiveness increases the policyholders satisfaction. 
Anshuja Tiwari and Babita Yadav in their article “Analytical Study on Indian Life Insurance Industry in Post Liberalisation” reveal that prompt customer service, after-sales services, innovative products with flexibility and better communication influences the customer satisfaction towards private life insurers than public sector insurer, LIC.
Deepika Upadhyaya and Manish Badlani carried out a study entitled, “Service Quality Perception and Customer Satisfaction in Life Insurance Companies in India”, with a view to identify customer satisfaction in retail life insurance in India. They identify that the policyholders are more satisfied with the pricing factor followed by employee competence, product and service, technology, physical ambience of the company, trust, service delivery, advertising and service management.
Lawrence and Nancy Stephens in their study titled, “Effects of Relationship Marketing on Satisfaction, Retention and Prices in the Life Insurance Industry”, reveal that well-organised marketing enrich the service quality which in turn improves the policyholders level of satisfaction.
Kaur et al. carried out a study entitled, “A Study on Customer Satisfaction with Life Insurance in Chandigarh, Tricity”, observe that policyholders are more satisfied with the policy features, price, maturity benefits and tax saving contents.
Panchanatham et al. carried out a study entitled, “A Study on Policy Holders Expectation and Preference towards Selected Private Life Insurance Companies in Karur District”, identify that the policyholders are highly satisfied with the premium amount fixed by the company and the maturity amount received after the maturity period.
Paromita Goswami carried out a study captioned, “Customer Satisfaction with the Service Quality in the Life Insurance Industry in India”, to identify the dimensions of service quality that ensures maximum satisfaction for the customers in the life insurance industry. He finds that customers are more satisfied with responsiveness dimension of service quality namely, promptness and timeliness in service as well as willingness to help the customers.

ANALYSIS AND INTERPRETATION

Table No: 1 Number Of Respondents Who Have Taken Life Insurance As Per Age

Age Group
No. Of Respondents
Percentage
21-30
39
18.57
31-40
29
13.81
41-50
99
47.14
51-60
43
20.48
Total
210
100
Source: Primary data



Inference (Table 1):
From the above table it is inferred that most of the Life Insurance Policy Holders say 47.14% are in the age group 41-50, and 20.48% of the respondents are falls in the age group of 51-60 which shows elder people give preference to Life Insurance. 18.57% of the respondents are in the age group of 21- 30 and only 13.81 % of the respondents are in the age group of 31 to 40, it shows that the interest in investing insurance is less for the youngsters.




Table no: 2: number of respondents who have taken
Life insurance as per gender

Gender
No. of respondents
Percentage
Male
84
40.00
Female
126
60.00
Total
210
100

Inference (Table 2):

From the above table it is inferred that 40% of the respondents are Male and 60% of the respondents are Female, which shows female are interested to invest in life insurance more than male.

Table No: 3 -  Number Of Respondents Who Have Taken Insurance As Per Income

Income
No. of Respondents
percentage
5000-10000
28
13.33
10001 – 15000
44
20.95
15001 – 20000
74
35.24
20001 – 25000
37
17.62
25001 – 30000
27
12.86
Total
210
100

Inference (Table 3):
From the above table it is inferred that 35.24% of the respondent’s belong to 15001- 20000 income group which shows more interest in investing in life insurance. 20.95% of the people fall in 10001-15001 group and 17.62% of the people falls in 20001-25000 groups which show they give moderate preference to life insurance investments. 13.33% of the respondents are in the income group 5000-10000 and 12.86% of the people are in 250001-30000 group which shows they give less preference for life insurance investments.

Table no: 4 savings per month made by people
Savings
No. of Respondents
percentage
0 – 10%
90
42.85
10% - 20%
78
37.14
20% - 30%
26
12.38
30% - 40%
16
7.61
Total
210
100











Inference (Table 4):

From the table it is inferred that 42.85% of the respondent’s have said they have savings of 0%-10% and 37.14% of the respondent’s have 10%-20% per month, which shows their interest for savings is less. 12.38% said their savings is 20%-30% per month and 7.61% of the people have 30%-40% savings, which shows they give more importance for savings.

Table No: 5 - Information Source Which Create Awareness About Life Insurance

Source
No.of Respondents
Percentage
Friends
50
23.81
Media
35
16.67
Agents
98
46.67
Others
27
12.86
Total
210
100

Inference (Table 5):

From the above table it is inferred that 46.67% of the respondents said they came to know about insurance through agents. 23.81% of the respondents said that they learned about life insurance through friends and 16.67% of the people through media. This shows that agents play a key role in life insurance business.

TABLE NO: 6 -  Calculation Of Chi-Square Test Between Savings Percentage Per Month And Income Per Month

Hypothesis : There is no significant difference between income level and percentage of savings.

Income 5000-20000
Income 20001-30000
Total
62
23
85
57
23
80
15
9
24
12
9
21
146
64
210

O
E
(O-E)
(O-E)2
(O-E)2 / E
62
59.10
2.9
8.41
0.1423
23
25.90
-2.9
8.41
0.3247
57
55.62
1.38
1.9044
0.0342
23
24.38
-1.38
1.9044
0.0781
15
16.69
-1.69
2.8561
0.1711
9
7.31
1.69
2.8561
0.3907
12
14.6
-2.6
6.76
0.4630
9
6.4
2.6
6.76
1.0562



TOTAL
2.6603


Inference:

Table value for )(2 for degrees of freedom 3 at 5% level of significance is 7.81.  Calculated Value is less than table value. Therefore the hypothesis is accepted. There is no significant difference between the income level and percentage of savings per month. The respondents in the study were more on 41-60 age groups and their spending ratio was more. Hence the factors income level does not have any impact on percentage of savings


TABLE NO: 7 Calculation Of Chi-Square Test Between Number Of Policies And Income Per Month

Hypothesis       : There is no significant difference between income level and number of policies people have.
Income
1
2
3
4
Total
5000-20000
52
61
24
9
146
20001- 30000
24
16
17
7
64
Total
76
77
41
16
210

O
E
(O-E)
(O-E)2
(O-E)2 / E
52
52.84
-0.84
0.7056
0.01335
61
53.53
7.47
55.8009
1.0424
24
28.50
-4.50
20.25
0.7105
9
11.12
-2.12
4.4944
0.4042
24
23.16
0.84
0.7056
0.0305
16
23.47
-7.47
55.8009
2.3775
17
12.50
4.5
20.25
1.62
7
4.88
2.12
4.4944
0.9210



TOTAL
7.11945

Inference:

Table value for )(2 for degrees of freedom 3 at 5% level of significance is 7.81. Calculated Value is less than table value. Therefore the hypothesis is accepted. Hence there is no significant difference between income level and number of policies taken bythe respondents. The respondents in the study have mentioned that they have savings up to 10% per month are more. They may invest in some other investment alternatives. Hence it is proved that there is no relationship between level of income and number of policies.




TABLE NO: 8 Table Showing Overall Satisfaction About The Company



Choice
No.of Respondents
Percentage
Satisfied
181
86.30
Dissatisfied
0
0
Neutral
29
13.70

210
100

Inference:

From the above table it is inferred that 86.30% of the respondents have stated that they are satisfied with the company, which shows that the company is renders good customer service to its customers. 13.70% of the respondents have stated that the satisfaction level with the company is neutral.

FINDINGS & CONCLUSION
1.      Majority of the respondents are in the age group of 40 to 60, which shows middle aged people show more interested in life insurance investments than youngsters.
2.      According to our study most of the respondents are female which shows female are more interested in life insurance.
3.      As per our study the income level of a person does not affect the savings rate per month.
4.      46.67% of the people have said that they came to know about insurance through agents, which shows that the agents play a key role in life insurance business.
5.      As per the study 42.85% of the people have said they have savings of 0-10% per month in the income group
6.      86.30% of the respondents have said that they are satisfied with the LIC Life insurance company and 13.70% of the respondents have said that they remain neutral regarding the satisfaction level with the company.
References
[1]               Marketing Management Philip Kotler, Prentce Hall of India Private Limited New Delhi 2000
[2]               Marketing Research Malhotra, third edition, Pearson Education.
[3]               A Note on the Insurance Status in India for Poor, Aggarwal and Preeti Alliance Journal of Business Research, 2005
[4]               A Study on the Expectations and Perceptions of the Services in Private Life Insurance Companies, Keerthi, P. and Vijayalakshmi, R SMART Journals, Vol. 5, 2009.
[5]               A study on Service Quality Measurement and its Impacts in Opting Insurance Companies” International Journal of Social Science & Interdisciplinary Research, Malini (2012)
[6]               Power, J. (2011). Policyholders Satisfaction with the Agency-Based Sales Surpasses Satisfaction with  Direct Sales in Japan.  IRDA Journal, 8, 8-12.
[7]               Ravipa Larpsiri., Mark Speece  (2004). Determinants of customer Satisfaction: A  Model of Technology Integration in Thailand’s Insurance Industry. IRDA Journal, 7, 18-21.
[8]               Song Hongmei (2006). Insurers Score Low in Client Satisfaction. IRDA Journal, 10, 22-26.
[9]                Anshuja Tiwari and Babita Yadav (2012). Analytical Study on Indian Life Insurance Industry in Post Liberalisation. IRDA  Journal, 1, 27-31.
[10]           Deepika Upadhyaya and Manish Badlani (2011) carried out a study entitled, “Service Quality Perception and Customer  Satisfaction in Life Insurance Companies in India”. IRDA Journal, 2, 23-31.
[11]           Behera,N.M. (2006).The touchstone of policyholders faith. IRDA Journal, 10, 26-31.
[12]           Kapil Mehta.(2014).Challenges of Scaling Up. IRDA Journal, 12, 27-29.
[13]            Venugopal,R.(2015).If dissatisfied tell us. If satisfied tell others. IRDA Journal, 13, 12-16.
[14]            Dr.Ashish Barua.(2015).Handling Customer Complaints in Insurance. IRDA Journal,17-21
[15]           Dr.Mallikarjun.(2015).IRDAI and Grievance redressal in Insurance Sector. IRDA Journal, 25-29








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